Last night I couldn't sleep well. I was so excited and I wanted to be at the voting center before it even opens its door. I was afraid that I was going to be among a minority who are going to vote, but I was still very happy for rather a different reason. It's that just as I care about the outcome of this election and that democracy would work in Iraq, I cared no less about voting on a personal level. This was my way to stand against those who humiliated me, my family and my friends. It was my way of saying," You're history and you don't scare me anymore". It was my way to scream in the face of all tyrants, not just Saddam and his Ba'athists and tell them, "I don't want to be your, or anyone's slave. You have kept me in your jail all my life but you never owned my soul". It was my way of finally facing my fears and finding my courage and my humanity again.

In late January 1945--about the same point in time at which Auschwitz was liberated--Violette Szabo was shot, in the Ravensbrueck concentration camp. Like Noor Inayat Khan, about whom I have written previously, she was an agent of the shadowy British organization Special Operations Executive. Noor and Violette were very different people; the heroism was the same.

Violette Bushnell was born to a French mother and a British father; she grew up mostly in Britain. As a child, she had something of a reputation as a daredevil and a tomboy; this did not keep her from developing into an extraordinary beauty. She left school at 14, working first as a hairdresser and later as a clerk at a Woolworth's store. In 1940, shortly after the fall of France, she met and married Etienne Szabo, an officer in the French Foreign legion. After Etienne departed for the fighting in North Africa, Violette decided that she wanted to do something on her own to aid in the war effort. more

Here is an extensive collection of posts reflecting on the horror of Auschwitz and the other Nazi concentration camps, organized by Israpundit. (The links can be found in the "trackback" section.)

I have only this to add:

After the world learned what had transpired under the Third Reich, there was a widespread revulsion against anti-Semitism. Indeed, as recently as 5 years ago, it appeared that anti-Semitism had become a relatively minor factor (at least in the developed countries) and was well on its way to extinction.

How naive this belief appears today! It is now clear that the ancient prejudice has continue to live in many hearts, and that the irrational and intemperate "anti-Zionist" words of many intellectuals and public figures have acted to release and to further inflame such beliefs. How horrifying it is that, in the year 2005, anti-Semitism appears to once again be a growing force within Western civilization. Let us firmly resolve to insure that, this time, it is stopped before it is too late.

I recently read The U-Boat Peril, by Captain Reginald Whinney, RN, a British destroyer commander during WWII. In the late 1920s, Capt Whinney attended the Royal Naval College at Dartmouth. He was not very impressed with the place, and his retrospective analysis is interesting:

What was really wrong with Dartmouth then? Well, my answer is cynical. The jobs of captain in command of the college and of his second-in-command, the commander, were 'promotion jobs'; and, in those days, the incumbent in a promotion job had only to do the same as his predecessor had done and he could hardly fail to be promoted. Further, these same captains and commanders had, while at Dartmouth...usually themselves been Cadet Captains. What was good enough for them...The requirement was to keep the sausage machine going.

I have no idea how accurate Capt Whinney's assessment of Dartmouth is...surely, they must have been doing something right, given the Royal Navy's performance in the war. But his analysis of the "promotion job" is an interesting one, with its applicability by no means limited to military organizations.

It's almost tautological...if you put people in jobs where all they have to do to get promoted is to remain in the job for a few years, then they are unlikely to do anything but remain in the job for a few years. You're certainly unlikely to see much in the way of innovation or of risk-taking behavior.

So, if you are an executive, you might ask yourself whether your organization includes anything that looks like a "promotion job"--and, if so, restructure it; that is, unless you actually like drones and time-servers as subordinate managers.

And what about the realm of education? It strikes me that, as things are now, the role of being a college student has been largely structured as a "promotion job." The student is incented to go through his 4 years or more, avoid taking any classes that might be difficult enough to unduly threaten his GPA, and avoid antagonizing any faculty members in a way that might harm the GPA or the letters of recommendation. Because the objective is, too often, not to accomplish things during the time spent on the job (in this case, to learn things), but rather to spend the requisite amount of time so that the much-desired certification can be obtained. That's a "promotion job" in Whinney's sense.

This is less true, of course, in the hard sciences and in engineering, where it's obvious that after graduation you're actually going to need to know what Young's Modulus is (or whatever)...but across wide swaths of American higher education, the concept of the "promotion job" seems highly applicable.

Many corporate mergers turn out...well, a little less brilliantly than their sponsors envisaged. Warren Buffett, quoted in Financial Times (1/24) suggests one reason why:

Many managments apparently were overexposed in impressionable childhood years to the story in which the imprisoned handsome prince is released from a toad's body by a kiss from a beautiful princess. Consequently, they are certain their managerial kiss will do wonders for the profitability of Company T(arget).

Such optimism is essential. Absent that rosy view, why else should the shareholders of Company A(cquisitor) want to own an interest in T at the 2X takeover cost rather than at the X market price they would pay if they made direct purchases on their own?

In other words, investors can always buy toads at the going price for toads. If investors instead bankroll princesses who wish to pay double for the right to kiss the toad, those kisses had better pack some real dynamite. We've observed many kisses but very few miracles. Nevertheless, many managerial princesses remain serenely confident about the future potency of their kisses--even after their corporate backyards are knee-deep in unresponsive toads.

Here's a different approach to managing a mutual fund: the Marketocracy Masters 100 fund makes investment decisions based on the investment choices of 70,000 individual investors. The participating investors track their (hypothetical or real) portfolios using Marketocracy's on-line tools. Each month, software selects 100 of the best portfolios--the m100--and holdings in the mutual fund are redirected in a way that models these portfolios. (Marketocracy is here.)

Will it work? So far, it has--over 3 years, the fund has done better than the S&P 500. In investing, though, past performance is no guarantee of future results. Will it work in the future? Seems to me that has to do largely with the algorithm used to select the top 100 portfolios. To the degree that the selection is based on short-term performance, it could be unduly influenced by individuals who are chasing what they feel is "hot" but don't necessarily pay enough attention to valuation..hence, it could act mainly as a momentum engine. To the degree that it is based on long-term performance, it could be driven by individuals who have done well in the past, and who are probably attentive to fundamental factors, but may have not adapted quickly enough to changes in the environment. So the proper blend of short-term and long-term performance measurements would seem to be crucial. The actual algorithm is said to assess both long and short-term performance, as well as the influence that "market, sector, style, and trading factors" make to these performances.

It's an intriguing idea, in any case--a kind of distributed community information processing which is somewhat reminiscent of the blogosphere.

As always, nothing on this weblog should be considered as investment advice.

Financial Times (1/22-23) has a long and thoughtful article on the differing responses of Denmark and Holland to the German occupation during WWII, and especially on the responses of the people in these countries to the treatment of the Jews. The writer, Simon Kuper, links this history to contemporary issues, including attitudes toward immigrants and the failure of the Dutch peacekeeping battalion in Srebrenica to accomplish its mission. Very interesting reading.

The "he" referred to was a man who was expressing his political opinions. After being knocked down, he lay in the mud and slush as he was repeatedly kicked in the back.

Where and when did this happen? Nazi Germany in 1938? Mussolini's Italy in 1928? The segregationist American South in 1958?

No. It happened this past week, in Washington DC, during the Presidential Inauguration. The assailants were leftist "anarchists" protesting against President Bush; the victim was a member of a counter-protest organization. Read the Washington Post story here. (registration required)

And here's another Post story about leftist thugs, who rampaged through the Adams-Morgan neighborhood, where they spray-painted buildings with the red "A" anarchists use as their symbol, threw a brick through the windshield of a police vehicle and smashed out glass windows and doors at a police substation and at Riggs Bank and Citibank branches.

And here's an interesting comment from a local political leader...D.C. Council member Jim Graham (D-Ward 1) criticized protesters for damaging property in an area of town that is largely liberal and diverse.

"Adams Morgan is not associated with the Republican Party," he said. "We are not the home of George W. Bush."

Couldn't he have just said that this kind of political violence is unacceptable, whoever the targets might be? Would that have been too much to ask for in the way of responsible leadership?

UPDATE: Michael Totten has some interesting thoughts on the mentality of people who can't tolerate political disagreement, here and here. The experiences he writes about involve only rudeness, hysteria, and threatened violence, as opposed to the actual violence in the items above, but the mentalities involved are surely very similar.

Seems like Photon Courier has itself been hung up for a while. The problem was caused by a link to a statistics package that seems to be having difficulties. I've temporarily disabled it so things should work better now.

There are many factors that have tended to make blog-reading a much more pleasant experience than reading most of the MSM's attempts at web content. One of these factors is simply performance. The typical MSM site is so graphics-intensive, and so cluttered, that page loads are often slow, even with a high-bandwidth connection.

I'm concerned that many blogs are headed in the same direction--more complex layout, lots of ads, etc. In some cases, it appears that the tracking system is the villain that is slowing things down. Yeah, it seems unfair to complain since these stats systems are usually free, but what good does that do if it drives your readership away?

In general, readers just aren't going to tolerate long delays in getting to useful content, and people need to keep this in mind when designing their sites.

And while we're talking about performance, Blogger Comments is often very slow. Also, I think the overall design of the system is very questionable--what exactly is the point of the Blogger Profile?..people can say whatever they want to about themselves on their own site. When I click on the originator of a comment, I want to see his blog, not some standardized page of predefined information. But the main thing is the performance...there are parts of the day when the system seems to be at an almost complete standstill. (Blogger was, of course, acquired by Google some time ago, and I would think that Google management would be concerned about the reflection on their reputation of this kind of thing.)

Here's something different in offshoring: some kids in California are getting tutoring from teachers in India...specifically, from the 17 employees of Growing Stars Infotech in Panampillynagar, Kochi, Kerala. (Article here, registration required.) So far, there are about 160 students. Whiteboard software is installed on computers at both ends of the Internet connection, allowing teacher and student to converse while the teacher can view and correct what the student has written with a pen mouse. The current facility in Kerala has 57 seats, but a need for more space is expected soon.

According to the article: One reason for the high growth rate could be that personalised tuition in US is highly expensive. "We started off with Indian students. But we have now around 60 American students and every one is happy because they are bettering the grades," says (a company official). The only hitch is the accent of the tutors which is being taken care of with help from a language trainer.

The company says there is huge demand for tutoring in mathematics, and, interestingly, English. Subjects in science have also recently been added.

Peter Drucker is often viewed primarily as a thinker and writer on business issues; however, his luminous accomplishments in this field should not cause one to lose sight of his substantial work on broader social topics. Here is a sample, and I think a very important one. The analysis starts out in 1000 AD, but is highly relevant to our own time.

The history of society in the West during the last millenium can--without much oversimplification--be summed up in one phrase: the rise, fall, and rise of pluralism.

By the year 1000 the West--that is, Europe north of the Mediterranean and west of Greek Orthodoxy--had become a startingly new and distinct ciilization and society, much later dubbed feudalism. At its core was the world's first, and all but invincible fighting machine: the heavily armored knight fighting on horseback...To support a single one of these fighting machines--the knight and his three to five horses and their attendants; the five or more squires (knights in training) necessitated by the profession's high casualty rate; the unspeakably expensive armor--required the economic output of one hundred peasant familites, that is of some five hundred people, about fifty times as many as were needed to support the best-equipped professional foot soldier, such as a Roman legionnaire or a Japanese samurai.

The knight exercised full political, economic, and social control over the entire knightly enterprise, the fief. This, in short order, induced every other unit in medieval Western society--secular or religious--to become an autonomous power center, paying lip service to a central authority such as the pope or a king, but certainly nothing else such as taxes. These separate power centers included barons and counts, bishops, and the enormously wealthy monasteries, free cities and craft guilds, and a few decades later, the early universities and countless trading monopolies.

By 1066, when William the Conqueror's victory brought feudalism to England, the West had become totally pluralist...By 1200 these "special interests" had all but taken over. Every one of them pursued only its goals and was concerned only with its own aggrandizement, wealth, and power, and the capacity to make societywide policy was all but gone.

The reaction began in the thirteenth century in the religious sphere, when--feebly at first--the papacy tried, at two councils in Lyon, France, to reassert control over bishops and monasteries...In the secular sphere, the counterattack against pluralism began one hundred years later. The long bow--a Welsh invention perfected by the English--had by 1350 destroyed the knight's superiority on the battlefield. A few years later the cannon--adapting to military uses the powder the Chinese had invented for their fireworks--brought down the hitherto impregnable knight's castle.

From then on, for more than five hundred years, Western history is the history of the advance of the national state as the sovereign; that is, as the only power center in society.

Prof Drucker traces the evolution of this centralizing process over time. But around the middle of the 19th century, he says, the tendency reversed direction again, toward a new world of pluralism:

The first organization that had to have substantial power and substantial autonomy was the new business enterprise as it first arose, practically without precedent, between 1860 and 1870. It was followed in rapid order by a horde of other new institutions, scores of them by now, each requiring substantial autonomy and exercising considerable social control: the labor union, the civil service with its lifetime tenure, the hospital, the university. Each of them, like the pluralist institutions of eight hundred years ago, is a "special interest." Each needs--and fights for--its autonomy.

Not one of them is concerned with the common good. Consider what John L Lewis, the powerful labor leader, said when Franklin D Roosevelt asked him to call off a coal miners' strike that threatened to cripple the war effort: "The president of the United States is paid to look after the interest of the nation; I am paid to look after the interests of the coal miners." This is only an expecially blunt statement of what the leaders of every one of today's "special interests" believe--and what their constituents pay them for. As happened eight hundred years ago, this new pluralism threatens to destroy the capacity to make policy--and with it social cohesion altogether--in all developed countries.

But there is one essential difference between today's social pluralism and that of eight hundred years ago. Then, the pluralist institutions--knights in armor, free cities, merchant guilds, or "exempt" bishoprics--were based on property and power. Today's autonomous organization--business enterprise, labor union, university, hospital--is based on function. It derives its capacity to perform squarely from its narrow focus on its single function. The one major attempt to restore the power monopoly of the sovereign state, Stalin's Russia, collapsed primarily because none of its institutions, being deprived of the needed autonomy, could or did function--not even, it seems, the military, let alone businesses or hospitals.

and

The challenge of the next millennium, or rather of the next century (we won't have a thousand years), is to presere the autonomy of our institutions--and, ins some cases, like transnational business, autonomy over and beyond national sovereignties--while at the same time restoring the unity of the polity that we have all but lost, at least in peacetime. We can only hope this can be done--but so far no one yet knows how to do it. We do know that it will require something that is even less precedented than today's pluralism: the willingness and ability of each of today's institutions to maintain the focus on the narrow and specific function that gives them the capacity to perform, and yet the willingness and ability to work together and with political authority for the common good.

This is the enormous challenge the second millennium in the developed countries is bequeathing the third millenium.

It's a generally-accepted fact that the savings rate in the United States is too low, and that this imperils our future growth prospects. Business Week (1/17, registration required) has an interesting article challenging this idea.

The writer, Michael Mandel, argues that both education and R&D should be considered as forms of investment. He points out that if a company purchases a piece of capital equipment--say, a machine tool or a production robot--the expenditure is considered as investment, and counts in the overall U.S. savings rate. But if the company spends the same amount of money on R&D...which may have an even greater impact on future income...that spending does not count in savings. And if a family spends money on a new rec room, that similarly counts as investment and shows up in the savings rate...but if they spend the money on college, that shows up as consumption, not savings. According to Mandel, the U.S. spends 9.6% of GDP on education and R&D combined..significantly higher than 7.8% and 7.5% for the next closest major countries (France and Canada).

There's merit in Mandel's argument, but I think there are problems with it, too. If a company buys a machine tool, it will most likely enjoy a reasonably long and productive life...whereas there are many R&D efforts that turn out to be trips down blind alleys. This is by no means an argument against the importance on R&D, just a caution about trying to account for it in the same way as more tangible assets. And the caution goes double for expenditures on education. When India, for example, spends money on education in basic literacy, I could see counting that money as investment/savings...it will have a direct economic payoff over a long time. But when Americans write checks to enroll their kids in courses in (say) "Applying Derrida and Foucault to Interpret Reality TV Programming," is that really investment in an economic sense? (I made up this particular course title, but have seen much stranger ones for actual university classes.) And Roger Simon just pointed out that tuition for the Columbia University Graduate School of Journalism runs $34,000. Will someone who attended CSJ produce $34,000 more in goods and services than a person a person who didn't attend CSJ? (His credential might displace the other individual for a particular job, but this is a zero-sum transaction...what matters from the standpoint of the overall economy is to what extent his degree adds to his effectiveness once his is in the job. Also, to generate a positive return on investment, the total incremental value over time woul have to be much more than $34,000, because of the time value of money.)

R&D and education indeed have some of the attributes of investment/savings, but the empirical question of effectiveness must be considered. Otherwise, we could kid ourselves that we are saving appropriately, when we are pouring money into useless R&D projects, bad approaches to K-12 teaching, and silly college courses.

Mandel deserves a lot of credit for trying to get behind the numbers and understand what they really mean: I'd like to see a lot more of this in business journalism (and general journalism, too.)

City Journal has a very interesting article on the history of classics-reading by members of the British working class. Excepts:

Will Crooks (b. 1852), a cooper living in extreme poverty in East London, once spent tuppence on a secondhand Iliad, and was dazzled: "What a revelation it was to me! Pictures of romance and beauty I had never dreamed of suddenly opened up before my eyes. I was transported from the East End to an enchanted land. It was a rare luxury for a working lad like me just home from work to find myself suddenly among the heroes and nymphs of ancient Greece."

and

In the nineteenth century, Shakespeare could still attract enthusiastic, rowdy working-class audiences, who commented loudly about the quality of the performances.

and

Lancashire weaver Elizabeth Blackburn (b. 1902) conceded that "our horizons were very limited and our education, linked up as it was to our economic conditions, provided little room for the cultivation of leisure pursuits. But I left school at thirteen with a sound grounding in the basic arts of communication, reading and writing"...If the objective of public education is to create citizens who never stop learning, then Elizabeth Blackburn's school succeeded brilliantly. When she went to work in the mills she memorized, by the rhythm of the looms, Coleridge's The Rime of the Ancient Mariner, Shelley's "Ode to the West Wind," Milton's "Lycidas," and Gray's Elegy.

and

In the mining towns of South Wales, colliers had pennies deducted from their wages to support their own libraries, more than 100 of them by 1934. The miners themselves determined which books to buy. One such library, the Tredegar Workmen's Institute, devoted 20 percent of its acquisitions budget to philosophy. Another spent 45 pounds on the Oxford English Dictionary. (In the best of times, a miner could not earn much more than a pound a day.) There were sophisticated literary debates down in the pits, where one collier heard high praise for George Meredith. That evening, he tried to borrow Meredith's Love in the Valley from the local miners' library, only to find 12 names on the waiting list for a single copy. "Every miner has a hobby," explained one Welsh collier. "It may be a reaction from physical strain. The miner works in a dark, strange world. He comes up into light. It is a new world. It is stimulating. He wants to do something. . . . Think what reading means to an active mind that is locked away in the dark for hours every day!"

On company time, and a half-mile below the surface, Nottinghamshire collier G. A. W. Tomlinson (b. 1872) read The Canterbury Tales, Lamb's Essays, The Origin of Species, and Oscar Wilde's The Ballad of Reading Gaol. Admittedly, that could be an occupational hazard: once, when he should have been minding a set of rail switches, he was so absorbed in Goldsmith's The Deserted Village that he allowed tubs full of coal to crash into empties. The foreman (quite rightly) clouted him and snatched the volume away. He returned it at the end of the shift and offered a few poetry books of his own—"BUT IF THA BRINGS 'EM DARN T'PIT I'LL KNOCK THI BLOCK OFF." Tomlinson tried to write his own verses and concealed them from his workmates, until one of them picked up a page he had dropped and read it: "No good, lad. Tha wants ter read Shelley's stuff. That's poetry!"

Quite probably connected with all these positive stories is this: Oral-history interviews reveal that, among British working people born between 1870 and 1908, two-thirds had unambiguously positive memories of school.

A few days after the tsunami struck, Varifrank was talking with some colleagues at work. One of them, a European, said:

"See, this is why George Bush is so dumb, there's a disaster in the world and he sends an Aircraft Carrier," and then laughed, as if sending an aircraft carrier was the most ridiculous thing one could imagine. Several other people laughed also, but Varifrank wasn't laughing, and neither was his Indian colleague, who had lost family in the disaster.

Varifrank pointed out that an aircraft carrier (a) can produce hundreds of thousands of gallons of fresh water per day (b) can produce large amounts of electrical power (c) is by its very nature an airfield (d) has hospital facilities and emergency supplies. His Indian friend then said to the Europeans:

"Can you let your hatred of George Bush end for just one minute? There are people dying! And what are your countries doing? Amazon.com has helped more than France has. You all have a role to play in the world, why can't you see that? Thank God for the US Navy, they don't have to come and help, but they are. They helped you once and you should all thank God they did. They didn't have to, and no one but them would have done so. I'm ashamed of you all.."

He left the room, shaking and in tears. The frustration of being on the other side of the globe, unable to do anything to assist and faced with people who could not set aside their asininity long enough to reach out and help was too much for him to bear. I just shook my head and left. The Euros stood speechless.

When you read a novel the voice is telling you a story; when you read a poem it's usually talking about what its owner is feeling; but neither the medium nor the message is the point. The point is that the voice is unlike any other voice you have heard and it is speaking directly to you, communing with you in private, right in your ear, and in its own distinctive way. It may be talking to you from centuries ago or from a few years back or, as it were, from across the room--bang up-to-date in the here-and-now. The details are secondary; all that really matters is that you hear it--an undeniable presence in your head, and still very much alive, no matter how long ago the words were spoken:

Western wind, when wilt thou blow
That the small rain down can rain?
Christ, if my love were in my arms
And I in my bed again!

Nobody knows who write that poem or even precisely when he wrote it (probably early in the 16th century). But whoever it was is still very much alive--lonely, miserable, hunkered down against the foul weather and a long way from home, yearning for spring and warmth and his girl. Across a gap of five centuries, the man is still our contemporary.

The American Spectator (Dec/Jan issue) has an interview with Tom Wolfe. Here's Wolfe on television anchormen:

There is an inverse status in television news: the person who leaves the building least is the highest ranked. The anchormen really are primitive versions of the old linotype machine. The anchor's voice converts material written by others into a form that is easily consumable by the audience--that's what the linotype machine did.

(I have to say, though, that this comparison is kind of unfair to the noble linotype machine. After all, the people who made linotypes never tried to give the impression that these machines were in some manner verifying the truth-value of the material they were typesetting....)

Posco, a major South Korean steelmaker, has agreed to double the amount that it is paying for high-quality coal from Australia. Actually, more than double...from $57.50/tonne to $125/tonne. Analysts believe the company will be able to raise its steel product prices sufficiently to cover the increased costs.

UPDATE: I can't get the song "Big Water" (Tom Russell / Iris DeMent) out of my head, even though it was written about an "ordinary" American flood. It's on this album (short audio clip available from Amazon.com)

From Roger Simon: "A friend recently told me that his daughter's teacher in a fancy NY private school instructed the students speicifically not to go to the library for their term papers, but to build their more useful Internet search skills." A couple of reactions:

1)No matter how useful the Internet is for research--and it is very useful indeed--there is a lot of material that can be found only in a good library. This is true across a wide range of disciplines.

2)Kids--especially those who are attending "a fancy NY private school"--will learn how to use Internet search as a matter of course. It's out there in the air, or in the water, or something. But it's likely they will not learn to use libraries unless they are specifically introduced to them by the schools (or they come from exceptionally literate families.)

Schools need to focus more on tasks that only they can perform, and less on things that are already being done elsewhere in the society. They need to pay more attention to the preservation and transmission of cultural capital and less on trying to follow every shifting breeze of the zeitgeist.

Here's an idea: maybe people whose main concern is being "trendy" should go into the fashion industry rather than into education.

Suppose you had a time machine. And suppose that you were planning a trip back to 1950, with $1000 in your pocket...and that you could invest this money in either of two companies, IBM or Standard Oil of New Jersey (which has evolved into Exxon Mobil.) Which one would you be inclined to bet on?

Remember, in 1950 the great era of computer industry growth was still ahead..the big mainframes, the System/360, the personal computer. IBM was in 1950 a relatively small company focused mainly on punched card equipment. With your assured foreknowledge of this future, wouldn't you be able to make a lot of money by selecting IBM?

Jeremy Siegel analyzes this scenario in Fortune (12/27/04) and concludes that you actually would have been better off choosing Standard Oil instead. Specifically, by 2003 your $1,000 investment in Standard would have grown to $1,260,000 versus a figure of $958,000 for the same investment in IBM...a difference of 25%. (The analysis assumes all dividends are reinvested, and I believe that Siegel doesn't include tax considerations.)

Standard comes out as a superior investment despite the fact that IBM did indeed grow much faster than Standard/Exxon-Mobil...an average annual growth rate of 12% in sales per share for IBM, vs only 8% for the oil company.

Why? Siegel gives two primary reasons. First, the the oil company paid a higher dividend...an average dividend yield of 5.2% versus 2.2% for IBM. Second, the shares of the computer company were more richly valued, reflecting market expectations of its higher growth...with an average P/E ratio for IBM of 26.8 versus only 13.0 for the oil company. And, obviously, when something has already gone up substantially, that leaves it less room to go up in the future.

Siegel's message is that yes, dividends do matter over the long term...and that even the most exciting growth stories must be assessed in the cold light of valuation. Worthwhile reading.

As always, nothing on this weblog should be considered as investment advice.

I've added several blogs to the blogroll, including University Diaries, A Constrained Vision, Red Bird Rising, and Victory Soap...see the list over at the left.

Congratulations to Betsy, who was recently referred to as "The Wall Street Journal of Bloggers" by PoliPundit..."quick to identify key stories and emerging issues of note, and she summarizes the links with an editorial talent sorely lacking in New York and Los Angeles. Dozens of previously unknown blogs have gotten their first expanded promotion through Betsy’s site"....she has also been called "The Christian Science Monitor of Blogs" by Hugh Hewitt.